The Liberal Democrat leader, Nick Clegg, revealed yesterday that in the event of a hung parliament he would only form an administration with another party committed to a "new constitutional settlement" involving wholesale reform of the governance of Britain.

In his first speech as leader to a national party conference, Clegg said he would "never allow the Liberal Democrats to be a mere annexe to another party's agenda".

He declared that he was in principle in favour of cutting the overall tax burden, although he did not commit himself to any specific tax cuts. He said: "We mustn't be a party that taxes for the sake of it."

Delegates warmly applauded the speech, which will reassert Clegg's standing in the party after last week's parliamentary rebellion over a referendum on the EU's Lisbon treaty. Although Clegg's tactics were criticised within the party, almost no one raised the issue publicly during the three-day conference in Liverpool.

With many polls suggesting that no party will have an overall majority after the next election, there is speculation about whether the Lib Dems could do a deal with Labour or the Tories. Clegg said he wanted "a political system that works for the future" and he was "not just talking about electoral reform". He wanted a wider commitment to political reform.

Clegg did not set out a precise shopping list of demands for a deal, but he identified some of the areas where he wanted reform. He called for: a £25,000 cap on political donations; MPs found guilty of serious misconduct to be forced to defend their seats in a by-election; greater local democratic control of services; and a citizens' jury of 100 people to join political parties, churches, civil society groups and others in a constitutional convention to "redesign the way Britain is governed".

· This article was amended on Tuesday March 11 2008. We rather overstated the extent of Nick Clegg's call for a cap on political donations in the article above. The Liberal Democrat leader's proposed limit is £25,000, not £25. This has been corrected.